Business Credit Line Rates Canada 7 Park Avenue Financial

Header Graphic
Call Today For Canadian Business Financing Expertise tel 416 319 5769 !
Business Credit Line Rates In Canada. Which One Of These Two Works For Your Company?
Busines Line Of Credit Options



 


 

 

YOUR COMPANY IS LOOKING FOR BUSINESS CREDIT LINE SOLUTIONS!

BUSINESS LINE OF CREDIT NEEDS? WE'VE GOT THEM

You've arrived at the right address! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the  biggest issues facing business today

ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT  BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

line of credit for business   7 park avenue financial

Business credit line rates in CanadaWhat factors determine the cost of lines of credit for your company based on the type of revolving credit line you choose and the particular characteristics of that type of facility? The reality?  You've got two basic choices for this method of Canadian business financing for a business loan,  and it's perfectly legal to check out and consider both! Let's dig in.

 

THERE ARE 2 TYPES OF BUSINESS CREDIT LINES IN CANADA - WHICH ONE WORKS FOR YOUR COMPANY

 

 

One of the largest misconceptions in Canadian business is the fact that there is only 1 type of business credit line in Canada for small businesses. Wrong!  Your company has the choice of the traditional (and revered?!) Canadian chartered bank facility.  But in recent years there is a new kid on the block, the non-bank Asset-based Credit Line. 

 

 

THE CANADIAN CHARTERED BANK SOLUTIONS

 

 

In the past, we are more than sure that most businesses view the bank facility as the best and only way to go re cost and flexibility and borrowing power. It certainly the case when it comes to cost, as Commercial credit lines are based on bank spreads that more often than not come in at 1 or 2%  above the current prime rate. These days with rates ( fixed / variable rate )  being so low the bank credit line is tremendously appealing and terms and conditions are flexible.

  

 

5 KEY REQUIREMENTS FOR BUSINESS BANK FINANCING IN CANADA

 

 

When the bank facility isn’t appealing is when your firm doesn't qualify for traditional bank criteria which at the end of the day revolve around a small handful of key metrics:

 

 

Size of facility

Debt to Equity ratio

Cash Flow Coverage

Profits

Business Owner  Personal Credit Score/Net Worth

 

If your firm has the financial appeal to a Canadian bank a feeding frenzy can easily occur as the banks step over each other racing for your business. What a great deal.

 

THE ASSET BASED LENDING CREDIT FACILITY

 

 

On the other hand, your business financing need for a revolving credit line in Canada can be fully satisfied by an ABL. It's a non-bank credit line that fundamentally lumps together all your current and fixed assets and allows you to borrow against them in one facility, with a credit limit that grows as your business revenues increase. Confusion often exists when we explain that offering to clients as they can be forgiven as to how they can maintain a business credit line outside the bank. Trust us... they can.

 

 

THE COST OF ASSET BASED FINANCING

 

 

The pricing on Asset-based credit lines fluctuates, and that's a bit of an understatement. Typical facilities range at a minimum in the 250k range, and many of the largest corporations in Canada borrow tens of millions of dollars under this type of arrangement.

 

 

How does pricing work in ABL, as compared to the bank? Here's the straight answer on that. If your firm can satisfy the 4 key elements of bank business credit lines, as we have noted above, your firm can match or beat bank pricing where the interest rate and your ability to pay interest is always going to be satisfactory and commensurate with your business credit quality.

 

The reality is though that the ABL business credit line rates offer more borrowing power and less restrictive credit criteria for approval. As a result the pricing typically is higher and in some cases much higher than bank financing.  So the correct answer is that ABL credit facilities range anyway from Prime rate to as much as 1.5% per month, essentially mezzanine type rates. 

 

small business line of credit

CONCLUSION

 

 

Business owners and financial managers need to balance credit line rates against their ability to satisfy lending criteria and access short term capital they might not be otherwise able to get approved for. Interest rates will typically always be higher in asset-based financing credit lines but that must be balanced against access to capital versus cost of capital.

 

 

So, what type of credit line and pricing works for your firm's business needs? Small business in Canada in the SME economy needs access to capital. Seek out and speak to a trusted, credible, and experienced Canadian business financing advisor with a track record of delivering business credit facility solutions.

Click here for the business finance track record of 7 Park Avenue Financial



7 Park Avenue Financial/Copyright/2020/Rights Reserved


' Canadian Business Financing With The Intelligent Use Of Experience '

 STAN PROKOP
7 Park Avenue Financial/Copyright/2024

 

 

 

 

 

Stan Prokop is the founder of 7 Park Avenue Financial and a recognized expert on Canadian Business Financing. Since 2004 Stan has helped hundreds of small, medium and large organizations achieve the financing they need to survive and grow. He has decades of credit and lending experience working for firms such as Hewlett Packard / Cable & Wireless / Ashland Oil